Malaysia Adopts “Impact Sourcing” to Develop its Talent Pool and Leverage New RPA Solutions

March 21, 20168:52 am665 views

To meet the global appetite for additional shared services and BPO capability, Malaysia is taking a two-pronged approach that includes developing and tapping the nearly 20% of its workforce considered “latent” – and leveraging new RPA solutions to get more performance out of individual FTEs.

Find out how the country is adopting “impact sourcing” to develop its talent pool, and what this means for your requirement to “scale”. The country is harnessing on its “latent’ talent pool and technology capabilities to provide for scaling opportunities.

As the appetite for shared services continues to gather momentum across the world, also gaining popularity in some newly emerging economies, countries across South East Asia are proactively planning for how to meet the expected surge in demand for human resources.

Malaysia, while not necessarily falling into the lowest-cost location category, has long promoted itself as one that can provide the kind of value-adding, knowledge type services that are increasingly in demand – something that sets it apart from many of its regional competitors.

Record Growth in Service Delivery Centers

To date, Malaysia is host to 410 centres that support global services operations, and which employ 90,000 full-time employees (this does not include another 200 pure play contact centres that employ an additional 45,000 staff).

Over the past year alone, 72 new services centres were set up. Compared to the average of 25 centres a year, the typical growth rate just a few years ago, 2015 marked a record 55% year-on-year jump – the highest growth in shared services and outsourcing centre investment in the two decades that records have been kept.

According to Malaysia’s Multimedia Development Corporation (MDeC), which partners with companies investing in Malaysia, the market for FTEs working in shared services and outsourcing is expected to grow by another 60% – to 160,000 – by 2020.

Right now, this 70,000 FTE shortfall is what’s preoccupying the country’s economic leaders, who have tapped “Impact Sourcing” as a means of delivering at least 45,000 of those resources.

What’s making Malaysia even more attractive these days in the radical drop in its currency, by 25-30% against the US dollar, as the commodities market collapsed last year. For dollar based organisations, Malaysia has become that much more attractive, now comparable to Poland, Costa Rica, India, or the Philippines.

While the currency arbitrage opportunity has not impacted the job market yet, Malaysia’s leaders don’t want to be caught snoozing. Which brings them to the question of, how to manage the necessary supply of talent. Even more importantly, what’s bothering them is the question: Do we have the talent to fill these jobs?

MDeC is already piloting multiple initiatives to identify new and additional sources of labour to feed this unprecedented demand. It has identified the “latent” talent hidden throughout the country as key, and is driving a number of projects that can be described as “impact sourcing”, as a solution (although in Malaysia’s case the philanthropic overtone often associated with this term is absent).

Impact Sourcing in Malaysia

Whereas impact sourcing is generally seen as a means of helping the poor (Africa is a prime example, where salaried jobs have a trickle-down impact on the local community), in Malaysia, a developed country, this is not the key priority.

Instead, the focus is on impacting the economic landscape by moving the jobs to where the people are. More specifically, it’s about shifting jobs from Tier 1 cities into the countryside and thereby tapping a hither to relatively invisible and inactive talent pool.

“Impact sourcing in Malaysia is not about helping the poor but about bringing jobs to the market,” explains Michael Warren, Vice President of MDeC. “We need to come up with a commercially viable solution that will help society by distributing the jobs to those who are not currently available or accessible.”

See: World Bank study shows Malaysians don’t lose jobs to foreign workers

In a country of 30 million people, MDeC estimates that 5.5 million constitute this latent workforce. The majorities of these people are distributed across Tier 2 and Tier 3 cities and are not currently actively engaged in the workforce. The strategy for Malaysia, therefore, is to bring this latent workforce into the fold and leverage it for the new BPO and shared services jobs coming in.

To identify the most effective way of doing so, five pilots are currently running to test different environments. These include:

  • Targeting areas with multiple universities close by
  • Targeting women or handicapped people that have been precluded from some jobs
  • Targeting an economic corridor across four states in the north of the country
  • Targeting a supportive state government in the south of the country
  • Targeting an economic corridor in close proximity to Singapore

Fighting Brain Drain

Countries like Malaysia and India have suffered from a “brain drain” as the workforce has moved from rural areas into already overpopulated and overcrowded cities, cities that may not even be able to sustain the infrastructure needed in terms of housing, water, and facilities to support these numbers. At the same time rural communities are losing out on every front.

Given their dependence on agriculture, they are susceptible to seasonal vagaries and disasters; and as the younger generation departs, only the older generation stays behind. What were once thriving villages are increasingly in decline, with those remaining struggling to survive or drifting along disillusioned, with few opportunities in sight.

Leveraging RPA Tools

The government of Malaysia is actively working on a long-term strategy to develop sustainable talent at the right skill levels to meet the needs of the international services community. While today these pilots are still in an early phase, what is evident is that Malaysia will offer a reliable ability to scale. And that is a capability that every shared services and outsourcing operation is looking for.

In addition, and as an alternative to simply feeding more FTEs into the mix, MDeC is actively piloting robotic process automation, which it sees as a significant opportunity to move up the value chain.

“While today a person is doing only one job, we recognise that by leveraging RPA tools, one person could conceivably carry out two or even three jobs at the same time,” explains Michael Warren. “As a country of 30 million people we know that we cannot ever rely simply on numbers alone. But by using automated software we have the capability of scaling exponentially.”

One of the pilots currently being run is leveraging this RPA capability in collaboration with some of Asia’s largest BPO providers. In combination with impact sourcing, Malaysia is banking heavily on RPA to tap into larger groups of people for automation-enabled work, to provide some of the best and strongest talent pools across the region.

Tips on How to take Advantage of Impact Sourcing

When applying the pricinples of impact sourcing to his own business model, S R Pejavar, CEO, Simply Grameen Business Solutions (SGBS) leveraged many of his industry contacts and his combined know-how in launching the SGBS brand. Here are some tips for those looking at taking advantage of this trend:

  • Start small and establish consistent practices
  • Leverage your personal relationships to gain support as well as customers
  • Work with local or regional governments for subsidies
  • Promote the positive impact through a far-reaching communication strategy
  • Target high-quality general managers; recruit people from Tier 1 or 2 cities who are originally from the location you’re investing in; they will have family ties that pull them back and keep them there.
  • Remember that the operations leader you recruit must be from the same industry so that he or she truly understands the customer experience.
  • The local government body must commit to providing good support for the infrastructure. Internet connectivity and power, for example, are crucial for business to function.
  • Look for a reliable talent source. Even more important, don’t just look at the numbers; look at the segment within the numbers that would be appropriate for your work. Not every candidate will be attracted by the work you offer.
  • Plan for scale. There’s not much point in launching a centre under 150 employees because the overhead costs will outweigh the possible margins, and leveraging management costs won’t make the business case, sustainability is around 200 and above.
  • Attrition will be greatest in the first four to six months. In fact, most attrition happens in the first month, with successive months seeing a steady decrease in its rate. “If someone stays for six months, they are probably going to stay for good,” says Pejavar.
  • In the early months, the culture shock of office work, the temptation of friends employed in other sectors, or a preference for physical labour will make itself felt.
  • Invest in thorough screening up front to avoid losing time and money. Also invest heavily in mentoring and monitoring in the first three months to foster belonging and comfort.
  • Invest in training but keep it simple. Strong consistent mentoring/ feedback will pay the greatest dividends in the long run.
  • Teach your customers to be patient! While quality is non-negotiable, working with an impact sourcing driven operation as opposed to a large multinational requires understanding on the part of the customers in the early months, as kinks are worked out. However, thereafter, they will be paid back in spades, mainly through low attrition, low costs, better productivity and as a result of the passion with which employees come to the job.
  • Expect and plan for a financial commitment upfront. While you don’t need a red carpet and even air-conditioning may not always be a priority, you do need non-negotiable secured facilities to be able to compete.

Finally to expand you’ll need to build up your capability, and that requires funding. Foster industry and government relationships that can support you. Make sure you communicate what can be done and incorporate the significant measure of improving life in distant locations into your business plan and grow the business complying with industry norms.

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Also read: 50% of Malaysian bosses polled plan to raise salaries this year

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